As we put the dumpster fire that was 2020 firmly behind us, it’s more important than ever to think about how we can transform 2021 into the life changing realignment that we all so sorely need!
In my experience as a financial adviser, many of us have a general idea of what it is we should be doing on our journey toward financial freedom but, for whatever reasons, fail to get started. Whether it’s option paralysis, procrastination or just “waiting for the perfect time” it’s this failure to get started that is one of the biggest financial hurdles we see here at Fox & Hare Financial Advice.
When it comes to finance, procrastination should be considered public enemy number one. Consider this, you’ve been thinking of getting started investing for a while – whether it be property, stocks or even additional super – but, for whatever reasons, haven’t yet taken the plunge. Every moment spent deliberating robs you of a moment that could have been spent accruing interest! Two hypothetical Surry Hills locals, Yin and Marcus are looking to begin investing. Yin starts January 2021, depositing $400 per week at five per cent per annum for ten years. Marcus takes a while to get started and doesn’t make his first deposit until January 2026, but decides on $800 per week – to make up for lost time. $400 per week for ten years or $800 per week for five, both at five per cent PA interest. Do you think there would be a significant divergence in the returns? If you said yes, you would be right. At the ten year mark, Yin would walk away with a total of $269,152 while Mark would finish more than $30k down at $235,752. The reason? Compounding interest – which is the interest you get paid on the interest that you earned!
It’s a general, very simplified example but still a pertinent one. If you’re looking to fail your future’s finances this year, then your very best bet is to not get started working on them!
Cover image credit: Glen Hare, Fox and Hare.